Report: Dramatic cuts to state worker pay would hurt Hawaii’s already-ailing economy

New warning from economic experts about the dangers of proposed pay cuts for state workers

HONOLULU, Hawaii (HawaiiNewsNow) - University of Hawaii researchers are warning proposed pay cuts of up to 20% for state workers could hurt the state’s already-ailing economy.

In a new blog post Tuesday, UH Economic Research Organization experts said preliminary analysis suggests the deep pay cuts would lead to a drop in Hawaii’s Gross Domestic Product of $3.3 billion from 2020 to 2022.

Ironically, it was UHERO report that the governor cited as the reason for the proposed furloughs.

The organization said in a worst-case scenario, the state budget would be facing a $1.5 billion shortfall.

No one denies the state is facing unprecedented budget shortfalls due to the shutdown and grinding halt in tourism. But the proposed slashing of wages upset members of a legislative committee formed to help address the pandemic and union leaders, who said the surprise proposal left them and state workers reeling.

Steve Pavao works for the state mental health clinic in Hilo and fears cuts in pay will send people in his office packing. “We work with some of the most challenged human beings in our community," he said.

Pavao fears co-workers will retire or find jobs in the private sector, which will affect the fragile group they serve.

Lakea Tjomsland, a dispatcher in Honolulu, is also worried that the county will follow the governor’s lead, even though Mayor Kirk Caldwell has not proposed any cuts right now.

“If the state counterparts go ahead and walk down that path, it’ll be opened for everybody else."

Randy Perriera of the Hawaii Government Employees Association sent a letter to Gov. David Ige on Tuesday pointing out the alternatives to furloughs and pay cuts that UHERO cites in its newest blog.

“One possible option to avoid large near-term cuts to state and county spending is to take advantage of the Federal Reserve’s Municipal Lending Facility.”

According to UHERO, up to $4 billion could be borrowed for both the state and the county and some of it could possibly be forgiven or paid back when more federal stimulus money is available.

Ige did say he would push back any pay cuts from May 1 to June 1 but has not said if he will reconsider them based on the new UHERO report.

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